Nationwide plan for two-tier advice system is grist to advisers’ mill
Towards the end of last year there was a fair amount of interest in the mortgage market share secured by the intermediary sector in 2015. While predictions of 80-85 per cent might have been premature, last year is perhaps more likely to have ended up closer to 70 per cent.
The move to intermediary distribution has been significant since the MMR but we are constantly warned that certain lenders with major direct operations will not be happy to sit back and watch this grow.
So it was interesting to read at the end of the year that Nationwide is lobbying the FCA to cut the time it takes to advise what it calls ‘seasoned borrowers’.
While first-time buyers with no mortgage experience might need a full, direct, interview-style ‘advice’ process – if we can call it that – Nationwide’s outgoing chief executive, Graham Beale, believes those who know what they want should not have to go through this.
Beale says the regulator is sympathetic, although how this chimes with the MMR and its requirements for all selling to be done on an advised basis, and for full affordability assessments to be carried out, is another matter entirely.
It is also clear that the definition of ‘seasoned borrowers’ will require some work if the regulator is to allow this to go ahead. One assumes these individuals will need to opt-out of the full process so as not to leave the direct bank or building society liable for any future complaints. Would this mean the customer is foregoing their statutory protections?
One has to wonder how this type of change might play out in practice. It certainly looks like an attempt by one of the major lenders to push through more mortgage interviews with their ‘adviser staff’ to bump up direct business.
Finally, how might this translate to the intermediary sector? If it were ever allowed, one assumes advisers could operate in the same way – but would we want to? The point of advice is to provide advice, not simply to take orders from customers.
I have a feeling this type of approach from the Nationwide will play even further into the hands of the advisory community which, on the back of any such change, should be able to continue to promote the benefits of independent, professional advice.
Rob Clifford, Shepherd Direct
New building must be backed with finance
“We are the builders,” declared Chancellor George Osborne as he announced some of the Government’s house building commitments in his Autumn Statement.
The numbers were significant – £7bn to build 400,000 new homes, 200,000 of which will be ‘starter homes’ for first-time buyers under 40; 135,000 Help to Buy shared ownership homes, plus £400m to build 8,000 specialist homes for older people and those with disabilities.
We also heard about the latest iteration of Help to Buy, the London version, which will give borrowers a 40 per cent (rather than a 20 per cent) interest-free loan under the current equity loan scheme.
It is clearly a priority for the Government and one suspects its ability to deliver on these plans by 2020 will determine the make-up of the next government.
At its heart, of course, lies an undeniable truth, that regardless of the Government support provided, purchasers are still going to need (at the very least) a five per cent deposit, and they will need to pass the more stringent affordability measures ushered in by the MMR.
Some lenders may profess an ongoing commitment to providing high LTV mortgages, but take away Help to Buy 2 and the increased capital requirements they are likely to face in the future, and that appetite may well wane.
Understanding this, and supporting a move from state support to the private sector in terms of mortgage insurance, will be crucial in the process of getting those new homes bought, rather than just built.
We all understand that the UK housing supply needs bolstering but we also need a system that can deliver the finance to those for whom the new properties are intended. If we can do this, we will take a significant step towards filling the housing gap. If not, we run the risk of not just standing still but falling further behind the requirements of this complex marketplace.
Pad Bamford, Genworth Financial